Milk production growth could impact dairy prices

According to analysts, a strong start to the dairy season was affecting prices. At the most recent GlobalDairyTrade auction, prices fell 1.9 percent which was led by a large fall in the price of fats. Anhydrous milk fat prices were down 4.4 percent, and butter was down 5.9 percent. Whole milk powder prices fell 1.2 percent and had lost 14 percent since the start of the season. According to data from the Dairy Companies Association of NZ, favourable weather saw the season off to a strong start, with production 4.7 percent up on the same time last year. ASB Senior Rural Economist, Nathan Penny, said the weather played a large role in the increase. Analysts pointed out that August only represented 8 percent of the total season’s production. Prices would further come under pressure if the trend of strong production growth continued.